O2 delays broadband launch for second time

Mobile phone company O2 has delayed the launch of its broadband offering to UK customers for the second time this year, with the service not due to roll out until September at the earliest, nine months later than originally planned.

Chief executive Peter Erskine also warned yesterday that the UK mobile market has "gone quiet" as it reaches saturation point with most pre-pay customers locked into longer 18-month contracts.

"Everybody is reporting a quiet first quarter," he said as O2, owned by Spain's Telefonica, announced it added just 118,000 new customers in the UK over the first three months of the year, compared with 359,000 last year.

Rival operators T-Mobile, Orange and Virgin Mobile fared even worse and lost customers over the quarter. "It's a very competitive market, as I have said before - there are winners and losers," said Mr Erskine. "You can already see the losers and I think we have proved ourselves to be one of the winners."

Amid intense competition, mobile companies are looking to "lock in" customers by adding new services. Orange and Vodafone have already launched residential broadband in the UK and last year O2 bought Be Broadband for £50m.

Its launch had already been delayed from January to June and yesterday Mr Erskine admitted it has slipped to September. "The one thing I will not do is launch something that isn't ready on the customer," he said.

By September Be Broadband will cover only half the UK population, so rather than plan a nationwide roll-out O2 will offer the service only in areas where customers are able to get online.